Saturday, July 14, 2012

Deceptive, to say the least

"The folks in Congress and on the campaign trail who oppose this plan warn that it would somehow hurt small businesses and job creators," Obama said in his weekly address. "They’re completely ignoring the facts."

"Under my plan, 97 percent of small business owners would avoid getting hit with any income tax hike whatsoever. In fact, I’ve cut taxes for small businesses eighteen times since I’ve been president. And just this week, I ordered a series of new steps to help our small businesses grow and hire," Obama said.

"The only place we disagree is whether we keep giving tax cuts to the wealthiest 2% of Americans. Republicans in Washington want more of those tax cuts. With the deficit we have, I don’t think we can afford them," the president said.

I know it is an election year, and that politicians will say almost anything (delete “almost”) if they think it will get them elected. But one has to wonder if the President gets his economic ideas from the Cracker Jack box. I am nothing more than a (very) amateur economist, but even I can see some problems here. Since it is very difficult to believe these arise from stupidity, I am forced to conclude that they come, rather, from duplicity.

First, consider the phrase “giving tax cuts.” This is terminology that is surely designed to mislead people. We have a certain tax rate right now. The question is whether or not to keep it the same, or allow it to go higher. The phrase “giving tax cuts” is surely intended to make people think that someone wants the current rates to go lower. Unfortunately for the economy, few if any are proposing that.

Second, if Obama really wants growth and hiring, he would especially want to avoid increasing the taxes of that horrible “wealthiest 2% of Americans.” People – no matter where they happen to fall in the wealth category – when they are allowed to keep their earnings, almost always do two things with those earnings. They either spend them, or invest them. (I suppose a few people hide cash in the mattress, but I think we can ignore them for our purposes.)

If people spend their earnings, they are buying things, which is good for people who sell things. Why does it so upset the Obamaniacs so much to think that rich people spend money? Isn’t that good for those with whom they spend it?

If people save their earnings, those savings are typically used to buy “capital goods” or things used to make the things we want to consume. Most of those despised ‘fat cats’ who are filthy rich have riches invested in something or other. And that something will be the stuff someone uses to make the stuff we want to consume. Unless, that is, governments like Obama tax away those earnings. Then, the stuff people want is not as easily made, and not made as much, giving us the kind of sputtering economy we have just now.

This is simply the way things work, economically speaking. It simply does not matter what anyone, including a President, thinks or says about it. It’s a sure as water running downhill. Since statists know this, and persist in policies that must make us poorer, it is difficult to believe that they want us anything other than poorer.

And that is not a wildly improbable idea, because collectivists clearly want people to be dependent upon government.

One final point. The President says that he doesn’t “think we can afford” what he calls “tax cuts” (which, remember, is really keeping tax rates constant). Real tax cuts do not cost anyone anything. What they do is limit the scope of government. Again, this is something statists do not want.